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2020 (10) TMI 1016
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....ent Year 2014-15. Since the due date of return was after the date of search the original return was filed on 31.7.2014 for Assessment Year 2014-15 declaring income of Rs. 76,331/-. Assessee was confronted with loose papers, incriminating materials found during the search. After considering the submissions assessment was completed u/s 143(3) by adding additions on account of unexplained cash at Rs. 1,35,500/-, unexplained jewellery at Rs. 38,96,987/- unexplained expenditure on account of foreign tour at Rs. 3,00,000/- and unexplained opening balance of capital account at Rs. 1,79,22,599/- thus assessing income at Rs. 2,23,31,417/-. 3. Aggrieved assessee preferred appeal before Ld. CIT(A) against the above additions and partly succeeded. Now the Revenue is in appeal before the Tribunal against the deletion of additions made by Ld. A.O. raising following grounds of appeal:- (1) On the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in deleting the addition of Rs. 2,25,000/- made by Assessing Officer on account of unexplained expenses incurred in foreign tour u/s 69C of the Income Tax Act, 1961. (2) On the facts and in the circumstances of the....
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.... travels undertaken by him. It is seen from the passport of the assessee that the assessee has visited to the following countries during the relevant period, which was not disclosed by the assessee in his written submission. Sr.No Name of the country Date of visit 01 Uzbekistan 24/07/2011 to 29/07/2011 02 Kazakistan 21/07/2013 to 29/07/2013 03 Russian Federation July 2013 (ii) The assessee has not furnished any details of expenses in his case. The assessee's submission that the expenditure on foreign travel of him is incurred by his wife Smt. Yogita Vishwakarma is also not correct. At the outset, his wife has shown foreign tour expenses on 20/07/2012 at Rs. 50,000/- from her cash flow statement, whereas as per the passport entries, the assessee has visited foreign countries in the month of July 2011 and July 20l3. Thus the claim of the assessee is absolutely incorrect. From this fact it is also evident that the cash flow statement (cash book) submitted by Smt. Yogita Vishwakarma is also incorrect. The assessee has also failed to furnish the receipts / bills in support of correctness of his claim regarding foreign travel expenses. Thu....
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.... has been incurred out of undeclared sources by the assessee and made additions for the same u/s 69C. The observation of the AO regarding additional tour to Russia in July 2013 is factually wrong. It would be observed from the pass part of the assessee a copy of which is enclosed herewith that the assessee has left New Delhi on 21.07.2013 and have reported back at New Delhi on 29.07.2013. The assessee reached Uzbekistan on 21.07.13 and left Uzbekistan on 25.07.13. Thereafter the assessee reached Russia on 25.07.2013 and left Russia on 28.7.13 where after he landed at Delhi on 29.07.13. Thus the tour to Russia was a part of the tour to Uzbekistan and was undertaken within the period he was out of India. Thus there was a single tour against which the addition has been made twice. In this regards it is further submitted that up till 31.3.13 (A.Y 2013-14), the assessee has been filing his return of income u/s 44AD of the Act, a fact which is duly confirmed by the AO in Para 10 of his order and accordingly the assessee is not required to maintain any books of account. Thus the assessee has not maintained any books of account and in absence of any books of account it wa....
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.... that the expenses incurred on the tour to Kazakhistan in FY 2013-14 was borne by the wife of the assessee and the same was duly disclosed by her in the cash flow submitted before the AO during the course of assessment proceedings in her case and a copy of the same was also furnished in the case of the assessee. Thus no addition could have been made in the hands of the assessee. The additions have been made by the AO applying provisions of section 69C. Provisions of section 69C is applicable in case where the assessee is found to have incurred any expenditure in any financial year for which the assessee fail to explain the source to the satisfaction of the AO. It is well settled proposition of law that addition u/s 69C can-not be made on adhoc basis or on presumption. The assessee relies on the following judgments _(2009) 311 ITR 175 (Del HC) Sec 69C postulates that first of all the assessee must have incurred some expenditure & there after if the explanation offered by the assessee about the source of such expenditure is not found satisfactory by the Assessing Officer the amount may be added to his income. There was nothing to snow that the expe....
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....reating the expense on foreign tour as unexplained. As regards expense incurred by the assessee on foreign tour in A.Y 2014- 15 it is seen that the assessee has undertaken one trip to the former USSR countries from 21.07.2013 to 29.07.2013 and the visit to Russia (25.07.13 to 28.07.13) was a part of this single trip. The assessee had submitted that the tour was undertaken to attend the meeting of CREDAl (Confederation of Real Estate Developers association of India) on behalf of the partnership firm "Ultimate Builder" in which the assessee was a partner and the expenses of Rs. 84,240/- were paid to M/s Creative Travels" by the said firm and have submitted a copy of ledger account of the travel agent. It is however seen that the assessee has not explained the source of day today expenses incurred in cash on this tour which were not covered by the travel plan. It is also seen that the expense are incurred in June 2013 and the tour is undertaken in July 2013. It is seen that similar tours are priced at Rs. 53,990/- for Kazakistan and Rs. 63,815/- for Uzbekistan respectively by M/s. Make My trip / Thomas Kook which are well recognized travel agents as against which the AO has e....
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.... other family members. III. The assessee has also not submitted any evidence which could substantiate the assessee's claim that the jewellery belongs to the various family members as claimed in written submission. IV The assessee has also not submitted any confirmation of other family members to prove that partial jewellery belongs to them. V The assessee has referred the Instruction No. 1916 dated 1110511994 of the CBDT issuing guidelines regarding seizure of jewellery during the course of search action. On the basis of this Instruction the assessee has computed permissible gold holding in respect of assessee and his family member and claimed that the jewellery found during the course of search is less than the permissible gold holding as per the CBDT's above instruction. In support of his submission the assessee has relied upon the decision of Hon 'ble Gujrat High Court in the case of Kialashaben Manharlal Chokshi Vs. CIT (2010) 322 ITR 411 (Gujrat), wherein it was held that the Boards instruction is also relevant in considering the assessee's explanation regarding the jewellery found during the course of search. The reliane pla....
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.... 5.5.1 The appellant during the course of appellate proceedings made allowing submissions: - "During the course of search in the residential premises and the bank locker of the assessee 1167.33 grams of gold was found. The family of the assessee consists of his mother Mrs. Ram Dulari, his father Mr. B. R. Vishwkarma, himself, his wife Yogita Viswkarma, his daughter Sakshi and son Sagar. It may be mentioned that the total jewellery found with the family at the time of search was as under: Location Gold Silver total Locker No 267 Uco Bank 893.92 gram - 893.92 At residence 273.41 252 525.41 Total 1167.33 252 1419.33 It may be mentioned that the assessee is living along with his mother and the jewellery was found from the locker jointly owned by the assessee along with his wife. At the time of opening of the locker the assessee had specifically informed the search team that the jewellery in the locker belongs to the wife and her mother in law and this fact is duly mentioned in the statement recorded. It may be mentioned that in Instruction No 1916 dated 11.05.1994 the board has issued guidelines that In the ca....
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.... into consideration, in the light of instruction issued by the Board, any middle class Indian family may be having jewellery and gold jewellery to that extent. Hence addition can be made on that count". Similar view is also expressed by the Hon 'ble Karnataka High Court in the case of Smt. Pati Devi vs ITO (1999) 240 ITR 727(Kar). Under the circumstances as the gold found was much lower than the limits ascertained as per the circular of CBDT the addition made is requested to be deleted. 5.5.2 I have considered the facts of the case, plea raised by the appellant and findings of the AO. During the course of search total gold jewellery weighing 1167.33 grams and silver articles of 252 grams were found from bank locker and residence of the appellant. the appellant has claimed that the jewellery found during the course of search belongs to his wife and his mother who was staying with him. At the time of opening of the locker the assessee had specifically informed the search team that the jewellery in the locker belongs to the wife and her mother in law and this fact is duly mentioned in the statement recorded at the time of opening of the locker. ....
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....ular no. 1916 of CBDT: "Instruction No. 1916 (F.No. 286/63/93-IT(INVII), dated 11-5-1994, issued by the Central Board of Direct Taxes (,CBDT,) directs the income tax authorities, conducting a search, to not seize jewellery and ornaments found during the course of search of varying quantities specified in the instructions, depending upon the marital status and the gender of a person searched. The guidelines are issued to address the instances of seizure of jewellery of small quantity in the course of search operations u/s. 132 that have been noticed by the CBDT A common approach is suggested in situations where search parties come across items of jewellery for strict compliance by the authorities. The CBDT directed that in the case of a person not assessed to wealth-tax, gold jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms. per unmarried lady and 100 gms. per male member of the family, need not be seized. " 5.5.4 The law with respect to quantity of jewellery and ornaments which could generally be held by the family members of an assessee has gone through huge litigations. Nevertheless, almost all Tribunals/ courts have consistently taken....
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.... it has been held that: "by referring to instruction no 1916 it was held that it is not the value which is considered but it is the weight which is considered reasonable looking to the social circumstances prevailing in the country. " * In the case of Harakchand N Jain v/s ACIT (1998) 61 TTJ 223(MUM) In which Hon 'ble Tribunal held that in the Indian society everyone receives gifts at the time of marriage & other occasion. Therefore, keeping in view the number of family members we are of the view that further rebate of 500gms out of the entire jewellery may be treated as explained". The learned AO is the above case has given rebate of only 300 gms in respect of his wife and only 180 gms with regard to his daughters out of the jewellery, weighing 1721.07 gms (gross) and 1662.05 gms (net) was found out of which only 765.25 gms seized. * In the case of Smt. Sulochana Devi Jaiswal v/s DCIT (2004) 90 TTJ (JAB)974 In this case it was held that The Board vide its Circular No. 1916, dated. 11th May, 1994, has prescribed the limit of 500 gms. for gold jewellery which is not to be seized. In other words, the Board has considered the i....
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.... as per boards circular No 1916. As regards silver articles of 252 grams found during search it has to be held that looking to the nominal value of the articles(less than Rs. 10,000) and the status of the family no addition is justified. Thus, addition made by the AO amounting to Rs. 38,96,987/- made on account of 1167.33 grams of gold jewellery and 252 grams of silver articles is Deleted. Therefore, appeal on this ground is Allowed". 10. From going through the above finding of Ld. CIT(A) we observe that Ld. CIT(A) has duly considered the permissible limits provided in the Central Board of Direct Taxes Circular No. 1916 dated 11.5.2014, ratios laid down by Hon'ble Courts and considering the number of family members, has rightly deleted the addition for unexplained jewellery of Rs. 38,96,987/- made by the Ld. A.O u/s 69C of the Act. We thus find no reason to interfere in the finding of Ld. CIT(A) and confirm the same. Accordingly Ground No.2 raised by the Revenue stands dismissed. 11. Apropos Ground No.3 wherein the Revenue has challenged the deletion of addition for unexplained cash at Rs. 1,35,500/- found at the assessee's residence during the course of search. We observe th....
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....shown income from salary received through cheque and tuition and has also filed cash flow in support of her claim. The AO had rejected the cash flow statement furnished by Smt Yogita Vishwakarma on account of non furnishing of salary certificate (Form 16) and details of students to whom tuition was provided. The assessee is also having substantial taxable income ( Rs. 4,96,720/-, Rs. 7,53,710/- Rs. 15,48,730/- Rs. 12,53,770/-, Rs. 24,74,340/- and Rs. 24,41,330/-) in A.Y 2008-09 to A.Y 2013-14 respectively. The assessee is also having his aged father and mother residing with him. Thus availability of cash in hand with the entire family of Rs. 1,35,500/-, looking to the size of the family and its status cannot be treated as unexplained. Thus, the addition made by the AO amounting to Rs.l,35,500/- Deleted. Therefore, appeal on this ground is Allowed. 12. From perusal of the above finding of Ld. CIT(A) and also going through the facts and circumstances of the case we observe that looking to the consistent substantial taxable income offered by the assessee for Assessment Year 2008-09 to 2013-14 and withdrawals made, we are of the view that the cash found at assessee's residence is re....
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....ii) The chart submitted by the assessee does not contain the bank details wherein lot of transactions are made during the relevant period. (iii) The chart submitted by the assessee does not contain the details in respect of investments in land / immovable properties, movable properties and capital accounts in the firm/ companies wherein the assessee is a partner / director. (iv) In what form the so called cumulative capital was invested is not submitted by the assessee. (v) The above chart does not show the correct picture of assessee's withdrawals for household expenses, as the withdrawals shown by the assessee are very low keeping in view the standard of living of the assessee and his family. (vi) The investments in the jewellery and cash found at residence and l ocker is not reflected in the above mentioned chart. (vii) The expenditure incurred on foreign travels are not included in the above chart. 5.7.1 The appellant during the course of appellate proceedings has filed written submissions which are reproduced as under:- "The assessee had been offering his income for tax under various presumptive provisions of t....
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....ments of asset and ledger accounts of associate concerns which were already verified by the AO in assessment of the respective firms and companies ii The chart does not contain bank details The chart was a summary of income earned as per ITR and expenses incurred to ascertain the increase in capital in various years and thus details of bank account does not have any relevance iii The chart does not contain investment details The chart was a summary of income earned as per ITR and expenses incurred to ascertain the increase in capital in various years and thus details of investments have no reliance. iv In what form cumulative capital was invested is not submitted The AO was informed in writing that all the assets and liabilities are recorded as per records maintained by the various firms/companies and purchase deed of the properties. Thus the investment of the capital was naturally made in these firms/ companies and properties. Further the assessee had prepared a notional balance sheet as on 31.3.13 as per which the excess of investments over the liabilities was ascertained at Rs. 1,79,22,599/- which was taken as capital. These balances were incorporated ....
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....o the findings arrived at in the assessment order. The appellant upto 31.03.2013 was carrying on his proprietary business of civil construction and was offering his income under the presumptive provisions of section 44AD of the Act. The assessee was not required to maintain any books of accounts and the assessee had not maintained any books for the various years up till 31.03.2013. The assessee commenced maintaining of regular books of accounts from 01.04.2013 and the books for F.Y 2013-14 (AY 2014-15) were made in the regular course and were produced before the AO which were verified by the AO. The assessee for starting maintenance of regular books was required to incorporate the opening balances of his asset and liabilities as on 31.03.2013. For this purpose the assessee has taken copies of his account in the various firms/companies in which he was a partner/shareholder or had any business dealings and the balances appearing in these accounts as on 31.03.2013 were taken as the assets/liabilities of the assessee. Similarly all the lands and other properties purchased by him until 31.03.2013 and owned by him on that date were also taken as opening balances of asset. The bank balanc....
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.... The AO had however disbelieved the contention of the assessee by observing that date wise details of the transaction are not provided, the chart does not contain the details of bank transactions, it also does not contain the investments made by the assessee and also does not provide the details of investment made through this cumulative surplus. He also mentioned that the chart does not contain the details of investment in jewelry and expense incurred on foreign tours. 5.7.3 I have considered the observations of the AO and have gone through the chart referred to by the AO and reproduced at Page 17 of the assessment order. It is seen that the chart is depicting the income earned by the assessee in the respective years as disclosed by him in his ITR/ITR of other firms in which he is a partner and ITR of the respective assessment year has already been accepted by the AO. Thereafter, deduction has been made for the expenses incurred by the assessee on the Income Tax, interest on House loan and estimated house hold expenses. After this deduction the net surplus earned by the assessee has been estimated and have been totaled for 6 years to calculate the cumulative surplus, Thu....